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FDIC Sues Over a Dozen Major Banks

The FDIC has named Bank of America BAC, JP Morgan JPM, Citigroup C and 13 other major banks in a lawsuit that alleges the financial institutions conspired to keep a key global interest rate low in an effort to enrich themselves.

NEW YORK (TheStreet) -- The Federal Deposit Insurance Corp. has named Bank of America (BAC), JP Morgan (JPM), Citigroup (C) and 16 other major banks in a lawsuit that alleges the financial institutions conspired to keep a key global interest rate low in an effort to enrich themselves.

The FDIC has accused the group of banks responsible for setting the London Interbank Offered Rate -- LIBOR -- of the "manipulation and suppression" of the rate resulting in the defrauding of banks not in on the scheme. The FDIC suit seeks unspecified damages, but does name 38 banks as being harmed by the LIBOR scandal.

The LIBOR rate underpins $350 trillion in derivatives and $10 trillion in loans around the world as estimated by the US Commodities Futures Trading Commission. The suit alleges that the illegal manipulation took place from April 2007 through mid-2011.

A new study by researchers at the Federal Reserve Bank of New York suggests that bondholders still don't believe the government would ever let the firms collapse into bankruptcy -- after a decade of efforts by regulators to convince them otherwise. But at least one analyst who tracks big Wall Street firms' bonds says there may be an even bigger problem: Investors, pressured by the need to generate income, simply don't care whether the banks are too big to fail -- one way or the other.

Goldman Sachs Group Co-President and former CFO Harvey Schwartz will retire April 20, the company said Monday in a press release. The announcement came just days after the Wall Street Journal reported that CEO Lloyd Blankfein is preparing to step down, possibly later this year.